Fitch: 4G spectrum to inject new life into India's BSNL

26 Sep 2018
00:00

With the Department of Telecommunications (DOT) approving state-owned operator BSNL's spectrum proposal, there is expectation that this will have a positive impact on the bottom line of the operator.

Fitch Ratings, however, cautions that any such revenue growth from the spectrum will only come if the carrier targets new subscribers and business areas.

BSNL will use the spectrum to build out its 4G network, which could be launched as early as March 2019. The operator already has 5MHz of 2100-MHz spectrum, which it shares with sister company MTNL across all telecom circles, although it is currently deployed for 3G services.

Fitch believed that BSNL’s spectrum portfolio will allow it to be able to build a sufficiently attractive new-generation network, which would support and grow its current base of 113.12 million subscribers. In Rajasthan, BSNL will use its 800MHz spectrum to offer 4G services. It intends to deploy 50,000 towers over the coming months to add to its existing portfolio of 130,000 towers.

BSNL remains a significant player in the mobile market with a 9.9% market share as of Q218, although this is down from a Q213 high of 11.6%. Its market share eroded as other operators began targeting rural mobile subscribers, which was a stronghold of BSNL owing to its extensive mobile network which covered villages.

The operator continues to lack traction in urban areas where private players operate significantly higher-capacity and reliable networks, and does not offer much beyond basic telecoms services.

According to Fitch, majority of BSNL's mobile subscribers are on low-value 2G services, and data utilization on its network remains minimal, making it difficult to sell data value-added services (VAS) to its subscriber base.

It recommends that BSNL shift reliance away from its rural subscriber base and seek to improve its offerings in urban centers. “We believe that BSNL will also look at IoT applications as the next revenue driver. It also revealed with the spectrum announcement a tie-up with IoT services provider Unlimit. We expect the company to make in-roads into the fleet management and logistics sector,” said Fitch.

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